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Market News Commentary - From The Desk of David Loesch 02.06.2020Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on February 5th, 2020
- CITI lead the street in underwriting paper last month as the value of deals rose 28% versus a year ago. State and local conferments sold 30.7B of bonds in January versus 24.1B a year ago. We have said that the calendar is light in February, and it continues to be; this should continue to push pricing up based on secondary trades.
- The most significant sales this week are a 465MM NYC Water deal and a 410MM PA State University deal.
- Over the course of my trip to NY last week, I spoke to other larger dealers who indicated their inventories have dropped by 12.1B, holding near the lowest since late 2014. I believe this figure is another sign of the strength of the 3.8Trillion municipal market, which returned 1.80% last month, the best since January 2015. Many thought that the MUNI market would not and could not repeat 2019; I do believe this way. However, I also think with the global economy struggling to find yield; muni's will have a steady interest.
- With our current low rates, cities and states are taking advantage of this by increasing their borrowing and refinancing of existing bonds. Such governments set to issue 13B of debt over the next 30 days, making the March calendar heavy. 4B of this will be taxable, which is a growing segment in this class. Even despite the large amount scheduled to be issued, it will still fall far short of the cash that investors will receive in February and March for principal and interest payments.
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